“Trump is widely expected to scrap the deal, and reimpose sanctions, including sanctions targeting Iran’s oil.

“However, confusion from a report earlier in the day has ensured oil traders have had a roller coaster ride across the session ahead of the announcement.”

The FTSE 100 closed the day flat at 7565.75, while the pound fell against the US dollar by 0.18% to 1.353. Against the euro, the pound rose 0.27% to 1.140.

In Germany, the Dax dropped 0.28% to 12912.21, and the Cac 40 in France was also down, falling by 0.17% to 5521.

Shire’s shares rose to the top of the FTSE 100 when it emerged Takeda had reached a takeover deal for the firm, valuing it at £46 billion.

The boards of both firms finalised the terms of the deal, settling on an offer of £49.01 per Shire share. Takeda said it represents a premium of around 64% compared with the price of its shares in late March, when rumours of Takeda’s interest began to swirl.

Shire’s shares jumped 4.63% by the market close. Shareholders will now need to approve the deal.

David Madden, market analyst at CMC Markets, said: “Takeda’s share price has dropped by 30% from the high in January, and given the downward trend, some Shire shareholders might not be enticed by the offer due to Takeda’s shares underperforming recently.”

Shares in rail and bus firm FirstGroup tumbled after its private equity suitor Apollo Management walked away from making a bid for the transport giant.

Shares in FirstGroup were down as much as 12.16% or 13.5p to 97.5p after Apollo said it did not intend to make an offer.

Apollo’s approach – for an undisclosed amount – was rejected last month by FirstGroup, which said it “fundamentally undervalues the company and is opportunistic in nature”.

The competition watchdog has referred the potential merger between Npower and SSE’s retail operations for a full investigation after the two energy giants failed to address concerns.

The Competition and Markets Authority (CMA) said the deal would now face a so-called stage two in-depth inquiry after its initial probe found the tie-up could reduce competition, potentially leading to higher prices for households. SSE’s shares closed the day down 8.5p at 1,387p.

Standard Life Aberdeen (SLA) has launched a challenge against Lloyds Banking Group’s decision to end a mammoth £109 billion contract with the asset manager, claiming it does not have “the right” to do so.

SLA said it “does not agree” it should lose the lucrative Scottish Widows contract and is disputing claims that competition issues were created by the merger of Aberdeen and Standard Life last year.